Fresquez v. Trinidad Inn.
2022 COA 96. No. 21CA0118. Health Care Availability Act—Arbitration Agreements—Agency—Actual Authority—Apparent Authority.
August 25, 2022
Plaintiff’s mother Trujillo moved into Trinidad Inn, a skilled nursing facility. Plaintiff coordinated Trujillo’s admission to Trinidad Inn with a social services assistant who had him sign admission papers, including a “Voluntary Agreement for Arbitration” (the arbitration agreement), which provided for binding arbitration of disputes among the parties. Trujillo died six months after her admission to Trinidad Inn. Plaintiff filed a negligence suit against Trinidad Inn, Inc.; C&G Health Care Management, Inc., which owns, operates, and manages Trinidad Inn; and Fransua, as administrator of Trinidad Inn (collectively, defendants). Defendants moved to compel arbitration based on the arbitration agreement. The district court denied the motion on grounds that the arbitration agreement was invalid.
On appeal, defendants argued that the district court erred in ruling that the arbitration agreement was invalid because Trujillo granted plaintiff actual authority to bind her to the arbitration agreement. An agent’s actual authority includes acts necessary to accomplish what the principal directed the agent to achieve. Actual authority to make health care decisions for a patient and to sign documents needed for the patient’s admission to a health care facility includes the authority to bind the patient to an arbitration agreement only where the patient has granted the agent (1) an unlimited power of attorney or (2) specific authority to bind the patient to an arbitration agreement. Here, the parties agree, and the record reflects, that Trujillo did not execute a power of attorney appointing plaintiff as her agent before he signed the arbitration agreement. Further, nothing Trujillo said or did indicated that she knew of the arbitration agreement or intended to give plaintiff authority to sign away her right to a trial in a court of law. Accordingly, plaintiff lacked actual authority to bind Trujillo to the arbitration agreement, and the district court did not err.
Alternatively, defendants contended that plaintiff had apparent authority to bind Trujillo to the arbitration agreement. An agent has apparent authority to affect a principal’s legal relations with third parties when a third party reasonably believes, based on the principal’s manifestations, that the agent has authority to act on the principal’s behalf. Here, Trujillo made no manifestations indicating that plaintiff had authority to bind her to the arbitration agreement, so defendants could not have reasonably believed that plaintiff had apparent authority to sign the arbitration agreement on her behalf. Further, because Trujillo never knew of the existence or terms of the arbitration agreement, she did not ratify the arbitration agreement.
The order denying the motion to compel arbitration was affirmed and the case was remanded for further proceedings.